Low Volatility
Options Strategies
Market is in very
narrow range. April is generally low volatility month. In such scenario Long
Option Traders tend to loose money day by day. Here we present some option
strategies for this type of lack luster market.
Low volatility options
trading strategies you can use:
Short Puts and Calls – This is the main strategy we use here and
by far the most profitable. It’s cheap and you don’t have to enter multiple
options making it an easy trade for beginners. With short options you can move
your strike price far from the current market forcing the market to make
dramatic moves in short time period. You also have positive time decay since
you collect the premium up-front and let the option expire worthless at
expiration.
Short Strangle – A combination of short Puts and short Calls. Again a great
risk reward type trade because you collect an up-front premium and let the
options expire worthless in a flat market.
Long Butterfly Spread – Very complicated and complex option trade.
No recommended for beginners! This is a great strategy with limited risk but
you have to be dead on in your analysis of where the stock will close at
expiration. Sure the risk is capped but if your not right at expiration there’s
a 100% chance you will lose money.
